A bagel shop in Brooklyn that garnered widespread fame for its multicolored bagels has been forced to close after New York’s taxing authorities seized the property.
According to the New York Department of Taxation and Finance, the owner of Rainbow Bagels owes almost $1 million in back taxes dating from 2011. The owner for his part acknowledged that he had been in discussions with the state about taxes but indicated he was planning to re-locate his shop anyway.
The bagel shop marketed a now famous Rainbow Bagel, a treat which, as the name implies, is a swirl of colors. The business attracted the attention of major national publications, including The Wall Street Journal. The author of The Wall Street Journal article saw the Rainbow Bagel as an up and coming fad in the world of food.
This store is not the only family-owned bagel shop of its kind to run in to trouble with the taxing authorities. In the last decade or so, both state and federal tax collectors have closed other noteworthy bagel shops in the area in and around New York City. In one case, the owner fell behind on federal payroll taxes which fund the country’s Social Security and public health insurance programs.
The lesson in this story is an important one for all smaller restaurants and shops in the White Plains area: A problem with taxes, whether due to a tax controversy or just financial and business issues, can tank an otherwise successful business. This is why someone struggling with state or federal tax collectors should strongly consider getting legal advice.